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Feb. 11, 2020, 5:15 p.m. EST

Money flows into tech stocks are stronger than ever, a possible contrarian indicator

At these lofty levels in the market, sometimes it takes only slightly bad news to rattle investors

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By Nigam Arora


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Popular technology stocks are leading the U.S. stock market higher. It seems investors are willing to push up shares even amid signs of a slowdown in global economic growth, mixed earnings reports and the unknown perils of the coronavirus.

A way to understand the strength in those tech stocks is segmented money flows, which are like an X-ray of stocks. Just like a doctor uses an X-ray to see what is going on below the surface, prudent investors can do the same with stocks.

About a month ago I wrote that something rare had just happened in popular tech stocks. Now something even rarer is happening. Let’s explore with the help of a chart.

Mark Hulbert: What money flows and mutual funds really say about the stock market’s future

Chart

Please click here for a chart showing segmented money flows in 11 popular tech stocks. Due to the significant outperformance of these stocks, it makes sense to look at them in addition to the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.69% and broad ETFs such as S&P 500 ETF /zigman2/quotes/209901640/lastsale SPY -1.45% , Nasdaq 100 ETF /zigman2/quotes/208575548/lastsale QQQ -1.42% and small-cap ETF /zigman2/quotes/209961116/lastsale IWM -2.83% .

Note the following:

• A month ago I wrote: “The single most important observation from the chart is that, of the 33 money-flow-related data points, not a single one is neutral or negative. This happens only once in a blue moon.” Please see: “Something rare is happening among popular technology stocks.”

• Since then, tech stocks have risen strongly and carried the stock market up with them.

• One of the most notable changes in the last post was that the non-risk-adjusted ranking for Tesla /zigman2/quotes/203558040/lastsale TSLA +5.62% had moved up to No. 1 from No. 9. Tesla’s stock has exploded since then. Please see: “This is how Tesla ranks compared with other popular technology stocks.”

• As the chart shows, the non-risk-adjusted ranking for Tesla is still No. 1.

• Despite a big move up in Tesla’s stock, smart money flows are mildly positive, momo (momentum) crowd money flows are extremely positive and short-squeeze money flows are also extremely positive.

• The risk-adjusted ranking for Tesla remains in last place, as shown on the chart.

• Money flows show that momo-crowd buying is extremely positive in Microsoft /zigman2/quotes/207732364/lastsale MSFT -0.92% , AMD /zigman2/quotes/208144392/lastsale AMD -4.27% , Amazon /zigman2/quotes/210331248/lastsale AMZN -0.64% and Apple /zigman2/quotes/202934861/lastsale AAPL -1.44% .

• Money flows show that momo crowd buying is very positive in Facebook /zigman2/quotes/205064656/lastsale FB -2.53% , Netflix /zigman2/quotes/202353025/lastsale NFLX -2.25% and Nvidia /zigman2/quotes/200467500/lastsale NVDA -4.52% .

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
21,052.53
-360.91 -1.69%
Volume: 451.62M
April 3, 2020 5:10p
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/zigman2/quotes/209901640/lastsale
US : U.S.: NYSE Arca
$ 248.19
-3.64 -1.45%
Volume: 135.56M
April 3, 2020 8:00p
loading...
/zigman2/quotes/208575548/lastsale
US : U.S.: Nasdaq
$ 183.37
-2.64 -1.42%
Volume: 47.49M
April 3, 2020 4:00p
loading...
/zigman2/quotes/209961116/lastsale
US : U.S.: NYSE Arca
$ 104.62
-3.05 -2.83%
Volume: 42.19M
April 3, 2020 8:00p
loading...
/zigman2/quotes/203558040/lastsale
US : U.S.: Nasdaq
$ 480.01
+25.54 +5.62%
Volume: 22.56M
April 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$88.51 billion
Rev. per Employee
$439,627
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/zigman2/quotes/207732364/lastsale
US : U.S.: Nasdaq
$ 153.83
-1.43 -0.92%
Volume: 41.24M
April 3, 2020 4:15p
P/E Ratio
26.78
Dividend Yield
1.33%
Market Cap
$1170.04 billion
Rev. per Employee
$902,473
loading...
/zigman2/quotes/208144392/lastsale
US : U.S.: Nasdaq
$ 42.59
-1.90 -4.27%
Volume: 79.33M
April 3, 2020 4:00p
P/E Ratio
143.55
Dividend Yield
N/A
Market Cap
$49.87 billion
Rev. per Employee
$641,089
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/zigman2/quotes/210331248/lastsale
US : U.S.: Nasdaq
$ 1,906.59
-12.24 -0.64%
Volume: 3.61M
April 3, 2020 4:00p
P/E Ratio
82.83
Dividend Yield
N/A
Market Cap
$949.21 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/202934861/lastsale
US : U.S.: Nasdaq
$ 241.41
-3.52 -1.44%
Volume: 32.47M
April 3, 2020 4:00p
P/E Ratio
19.07
Dividend Yield
1.28%
Market Cap
$1056.28 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/205064656/lastsale
US : U.S.: Nasdaq
$ 154.18
-4.01 -2.53%
Volume: 25.98M
April 3, 2020 4:00p
P/E Ratio
23.96
Dividend Yield
N/A
Market Cap
$439.48 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/202353025/lastsale
US : U.S.: Nasdaq
$ 361.76
-8.32 -2.25%
Volume: 4.86M
April 3, 2020 4:00p
P/E Ratio
87.51
Dividend Yield
N/A
Market Cap
$158.74 billion
Rev. per Employee
$2.22M
loading...
/zigman2/quotes/200467500/lastsale
US : U.S.: Nasdaq
$ 243.91
-11.56 -4.52%
Volume: 16.58M
April 3, 2020 4:00p
P/E Ratio
53.96
Dividend Yield
0.26%
Market Cap
$149.27 billion
Rev. per Employee
$882,428
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